2016 (9) TMI 441

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....sessee herein is a Chartered Accountant by profession. He was subjected to search u/s 132 of the Act on 5.1.95. During the course of search action, undisclosed investments made in shares were found and the assessee disclosed a sum of Rs. 25.45 lakhs as detailed below:- Shares found and seized by the department 10,37,000 Shares sent for transfer of names 13,00,000 Amount invested in furniture and fixtures 2,08,000   25,45,000 At the time of filing return of income, the assessee declared the shares of Rs. 23,37,000/- (Rs.10,37,000/- + Rs. 13,00,000/-) as stock in trade and accordingly prepared a profit and loss account by showing further purchase of shares, sale of shares and closing stock. The assessee also cr....

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....nd sales, but due to the fire that broke out in the premises of the above said broker which destroyed all the records, the assessee could not furnish other records. Accordingly he prayed that the profit declared in the profit and loss account should be accepted. 5. The Ld CIT(A) called for a remand report from the AO on the explanations furnished by the assessee. In respect of the addition of Rs. 25.45 lakhs made by the AO, the assessing officer reported that the assessee cannot be considered to be a trader in shares. He further reported that the assessee has failed to furnish all the relevant details that are required to prove the claim of purchase and sales. He also reported that bills submitted by the assessee in support of purchase a....

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.... the capital gains declared by the assessee in his return of income. The purchase of shares, in the accounting parlance, may be accounted as "current investment" or "fixed investment" depending upon the character in which it is going to be retained. Generally trading asset is referred to as current investment. Accordingly, we are of the view that the expression used in the statement given u/s 132(4) cannot be taken as determinative factor for deciding the character of the purchase of shares. On the contrary, the statement given by the assessee that he has been carrying on trading in shares in the name of family members has not been controverted by the revenue. Under these set of facts, we are of the view that there is no reason to doubt the....